The Securities and Exchange Commission charged Howard M. Appel with manipulating the stocks of three microcap companies while on supervised release following his criminal conviction for a prior securities fraud.
According to the SEC’s complaint, Appel orchestrated multiple schemes to manipulate the market for trading in shares of Virtual Piggy, Red Mountain Resources and Rio Bravo Oil, concealing his activity by using overseas associates and nominee brokerage accounts.
The complaint alleges that Appel secretly acquired ownership or control over sufficient shares of the companies so that he and his associates could manipulate their stocks through coordinated trading activity. Appel allegedly kept tight control over the trading and engaged in matched trading with his associates.
In one instance, he sought to coordinate artificial bidding activity to prevent the price of RDMP from dropping. His emailed instructions to his associates stated, “Have ur guy for 12500 at .87 and another 7500 at .85 in case we get hit by selling today. (My guy above that bidding .87).”
In another example in the complaint, Appel sold 200,000 shares of Rio Bravo to accounts controlled by one of his associates overseas in a series of matched trades that accounted for 80 percent of the reported volume on the company’s second day of trading.
“The charges here outline a scheme in which a repeat fraudster pocketed millions of dollars by manipulating the stock price of multiple microcap companies,” said Marc P. Berger, director of the SEC’s New York Regional Office. “Despite his use of elaborate arrangements and foreign jurisdictions to disguise unlawful trading activity, we detected Appel’s fraud and obtained a bar against him to protect the investing public.”
The SEC’s complaint charges Appel with violating prohibitions against the anti-manipulation and anti-fraud provisions of federal securities laws. Appel has agreed to settle the SEC’s charges and will be barred from serving as an officer or director of a public company. The court will determine monetary sanctions and other relief at a later date.
The U.S. Attorney’s Office for the Eastern District of Pennsylvania has filed a parallel criminal action against Appel.